Benzinga | Dec 13, 2021 06:12AM EST

Taylor Maritime Announced it has Agreed to Acquire a 22.6% Stake in Grindrod Shipping for $77.9M in Cash

Taylor Maritime Investments Limited (TMI / TMIP), the specialist dry bulk shipping company, is pleased to announce that it has agreed to acquire a 22.6% stake in Grindrod Shipping Holdings Ltd, a dual NASDAQ and Johannesburg Stock Exchange listed shipping business (NASDAQ:GRIN), for a cash consideration of $77.9m via a private, off-market acquisition from a wholly-owned subsidiary of Remgro Limited, Grindrod Shipping's largest shareholder (the "Acquisition").

Key highlights of the Acquisition:

Grindrod Shipping is an international shipping company which owns an attractive, modern fleet of 25 predominantly Japanese built geared dry bulk vessels which is highly complementary to TMI's portfolio

The Acquisition will be internally funded from the sale of two Chinese built vessels for a combined $42.8m of proceeds (representing IRRs of c.100% on each vessel and a MOIC of 1.5x), cash on the balance sheet and short-term drawings on the Company's revolving credit facility

The Acquisition at $18.00 per Grindrod Shipping share is at an attractive price in the light of the company's prospects and represents an annualized dividend yield of 16% (based on Grindrod Shipping's declared dividend for Q3'21)

Including a 2.2% position already acquired by TMI in the open market, TMI will own 24.8% of Grindrod Shipping's shares

The Acquisition is expected to close in early 2022 and not later than 28 February 2022

The investment in Grindrod Shipping is consistent with TMI's strategy of seeking accretive growth opportunities to increase shareholder returns at a time when dry bulk market fundamentals remain strong with a historically low order book and a robust global demand outlook. The Acquisition is also consistent with its policy of fleet renewal through the selective disposal of assets. Grindrod Shipping's fleet is highly complementary to TMI's existing portfolio with an average age of six years and above average energy efficiency compared with peers.

Edward Buttery, Chief Executive Officer, commented:

"We believe the investment in Grindrod Shipping is an excellent opportunity where we know and respect the company which has a high-quality, young and complementary fleet. The Acquisition will be internally funded by asset sales at premium valuations, cash on the balance sheet and prudent, short-term use of the Company's revolving credit facility.

Grindrod Shipping is a highly cash generative business and our investment is expected to be accretive from both a capital and income perspective with no impact on our dividend policy, our potential to pay an extraordinary dividend nor on our ungeared long term capital structure."

Prior to the Acquisition, the Company consulted with a number of its Shareholders to gauge their feedback as to the terms of the Acquisition. Feedback from this consultation was supportive and as a result the Board has chosen to proceed with the Acquisition.

A call for investors and analysts to discuss the Acquisition will take place today at 10.00 a.m. GMT. Please find registration details here:

https://us02web.zoom.us/j/84359991206?pwd=Zmh1aTlhWWdvTGVFS0NSNnd6cVFPQT09

Meeting ID: 843 5999 1206

Passcode: 946871

Vessel deliveries

The Company also announces the delivery on 29 November of two geared Handysize bulk carriers to its trading fleet. One vessel was committed for purchase at the time of the Company's IPO (Seed Asset 22 as described the IPO prospectus) and the second vessel was committed for purchase in June (announced 16 June). These two ships increase the total delivered fleet to 29 vessels (including the two Chinese built ships committed for sale).

Both of the acquired vessels are fixed on short period time charters at average annualized unlevered gross cash yields of over 20% based on fair market values as at 30 September. The final three committed ships are expected to be delivered by the end of January.